The long-anticipated Bitcoin halving event is a mere four days away, and yet Litecoin prices on the LTCUSD pair do not seem to be feeling the love. Why?
Traditionally, Litecoin has always followed Bitcoin prices wherever they go. Litecoin is an analogue of Bitcoin, primarily designed using the same blockchain structure. This design has ensured a positive correlation between BTCUSD and LTCUSD pairs. Where Bitcoin goes, Litecoin is sure to follow. But recently, this relationship seems to have gone sour. Bitcoin has seen a surge in the last few days that has enabled it to rise from under $8000 to hit the $10,000 mark. Litecoin has failed to produce such a rally.
One reason for this may be that open interest in Bitcoin futures and options is hitting highs not seen in recent times. Open interest in Bitcoin options is reported to have exceeded the $1billion mark, according to data from Cryptonews. Open interest in Bitcoin futures has surpassed $400 million, which in itself is a record.
Litecoin is not seeing such numbers, and therefore it is reasonable to see such a dissociation occurring in the pre-existing correlated relationship.
The pair continues to trade within the confines of an ascending channel. Litecoin prices are slightly higher by 0.99% on the day and a push towards the upper channel boundary following yesterday’s
price bounce on the 44.15 support and the lower channel boundary. The pathway to actualize this move has two pitstops at 49.88 and 52.90; these must be taken out if Litecoin is to attain this goal. A further resistance target lies at 57.51, which is also a possible area where interaction could take place between the upper channel boundary and the resistance line formed by a cluster of lows of late October 2019 as well as late February/early March 2020.
On the flip side, a rejection at 49.88 could allow a return to the 44.15 support, with further decline towards 39.69 if the channel’s lower border gives way. The lows of 18 December 2019 and 30 March 2020 form another support line at 36.87.